The Basic Understanding of Financial Modeling

A financial model refers to a tool that is built in Excel to measure and predict a company’s financial performance in the years to come. The forecast is usually based on the organization’s historical performance and needs of preparing a balance sheet, income statement, and cash flow statement. From there, more advanced models can be built such as leveraged-buyout, cash flow analysis, sensitivity analysis, and mergers and acquisition. Since the financial model cannot be prepared without experts, using Financial Modeling and Analysis services will be an excellent decision for you.

What is it used for?

The model is used for making the right decisions and performing financial analysis, either inside or outside of the company. Executives, inside a company, will use financial models to make decisions on:

•    Raising capital

•    Making acquisitions

•    Selling or divesting business units or assets

•    Growing the business organically

•    Budgeting and forecasting

•    Valuing a business

•    Capital allocation

Who builds financial models?

Different types of experts build financial models. When it comes to job and career, investment banking, corporate development, accounting, and equity research are some of the most common types of career tracks.

How can one learn financial modeling?

The only way to learn this job is to practice. It takes many years of experience to become an expert in the field, and you will have to learn by doing.  Learning about Sell-Side and Buy-Side Research services and reading research reports will help you compare your results with others.

Another best way to practice is to go through a mature company’s financials, create a flat-line model, and calculate the present value per share. This needs to be compared carefully to the current share price, or the target price of the equity research report.

It’s also vital to form a solid base understanding by joining financial modeling courses. In the meantime, you might be interested in building your financial models. If you don’t want that much hassle, you should reach a renowned company, like Penterra Analytics and use its services related to market research and analytics.

Penterra Analytics has been offering top class market research and Sell-Side Research

services for a very long time and has cemented its place in the market. The company provides a wide range of services, including business research, competitor analysis, web-based survey, desk research, data entry, business support, and so on.

Contact Penterra Analytics today!